Modern Methods To Measure Business Success

Businesses can’t improve what they can’t measure, but ebizQ Vice President for Strategic Services Beth Gold-Bernstein and CommerceQuest President and COO Lee White described the latest ways to develop valuable and visible metrics to improve business performance during the expoQ webinar, How To Measure Business Success.



“You don’t have to start from scratch; there’s a lot of information out there and a lot of evidence that companies who do this get a lot of benefits from it. … But to perform at the top of the industry, you really need a comprehensive solution for process management,”” Gold Bernstein noted at the start of the webinar, which is part of the expoQ webinar series BPM and the Real Time Enterprise, sponsored by Commerce Quest.

She detailed how traditional measurement-based management methods, such as Dr. William Demming’s seminal stress on quality improvement, employee empowerment, feedback loops and a Plan-Do-Check-Act continuous cycle, are melding with new techniques to improve business processes.

Dr. Demming discovered that processes, rather than people, were often the problem and “with processes now crossing business boundaries, you really have to focus on reducing variation,” Gold-Bernstein noted.

She described how Total Quality Management (TQM), the Baldridge Award, ISO 9001, the Balanced Scorecard and Six Sigma’s respective focuses on cross-organizational communication, rating companies against ideal measurements, aligning corporate strategy and actions, and reducing process output deviation have proven effective for enterprises.

But no matter what approach – or combination of approaches – your company adopts, “it’s really important to use a metric that is relevant to strategic company objectives.” Gold-Bernstein cited one company whose order-entry clerks -- knowing they were being measured by inputs per hour -- would create a new customer record rather than taking the time to search the database for existing records.

“After a couple of years, they had millions of what they called sundry accounts. Coupled with the fact that some clerks worked for specific business units and had separate databases, the company had lost the ability to track what customers were ordering across product lines.”

Gold-Bernstein analyzed the five levels of the SEI Maturity Model used for software engineering– and the best ways to realize the substantial business advantages that can result from a rise in the rankings. For example, a rise from “Level 1” to “Level 3” results in 1.7 times faster project-completion times. Just as importantly, defined processes lead to predictable results.

At the same time, “you can’t get so overwhelmed with metrics that it just overwhelms people and they can’t manage it any more,” she said. “What’s most important is the feedback loop to look into processes and improve them over time.”

CommerceQuest’s White cautioned that while many companies are implementing technology-focused processes, “once they’ve poured that concrete, they tend to find that they’ve then created some amount of difficulty in keeping them current and flexible.”

White ran down the “strong capabilities and unforeseen outputs” of business process engineering and application-driven re-engineering. These include increased accountability and preservation of existing technology investments, but also limited scalability and failures to glean synergies across functional areas.

However, combining process optimization, Six Sigma principles and real-time feedback with BPM can result in a 45-60 percent improvement in underlying processes. White pointed out that the automatic tracking of employee performance can appear “Big Brotherish,” and he urged employers to communicate the benefits to employees in order to help gain their support for such projects.

White elaborated on Gold-Bernstein’s advice to develop dashboards to forecast trends, provide accurate benchmarks, and enable real-time process management and improvement.

He also described a specific management dashboard that allows both executives and employees to monitor critical processes, drill down to analyze data and ensure compliance with the stringent reporting requirements of the Sarbanes-Oxley Act (as detailed in our earlier webinars, Using BPM to Reduce Enterprise Risk and Using BPM To Limit Exposure Under Sarbanes-Oxley.

To find out more about optimizing metrics for continuous process improvement and operational excellence -- as well as related topics such as qualitative sub-measurements and emerging Web Services standards – watch a replay of How To Measure Business Success.

About the Author

Gian Trotta is ebizQ's managing editor. Before joining ebizQ, he developed a wide variety of virtual news and community features for Newsday, Prodigy, Time Inc., Excite, About.com and MSNBC.

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About ebizQ

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